Author: Steven, Payment 201
Last week, I attended the opening event for Unlimit’s Shanghai office, and on the way back, my colleagues discussed how all the PSPs are rushing into China.
Institutions like Tazapay and TerraPay are also continuously hiring, engaging with clients, and building local teams domestically. Last month, an old colleague from China’s largest payment collection PSP also mentioned to me that they’ve recently felt a strong impact from Slash-type virtual card products, driven by aggressive pricing strategies in certain markets.
Writing this article is purely out of personal reflection. In the past couple of years, observing cross-border payments has truly evoked a strong sense of disconnection and absurdity.
On the surface, there are weekly iterations of funding stories, asset acquisitions, and newly crafted narratives; beneath the surface, institutions are locked in a price war down to 0.01% and 0.02%, with PSPs, acquiring banks, agents, and ISOs fighting tooth and nail in an increasingly shrinking profit pool.
The industry may seem vibrant, but many businesses have regressed from competing on payment capacity to surviving through a game of using investor funds to subsidize transaction volumes, expanding risk tolerance to gain scale, and raising further funding based on stories and valuations.
In such a crowded space, where are the future foundational breakthroughs? And where are the opportunities for ordinary professionals? This article explores some more concrete industry insights through the lenses of fiat regulatory shifts, the essence of arbitrage, network effects, and a genuine deconstruction of Web3.
Section One: Deconstructing the Fiat World, Dispelling the Myth of Chinese PSPs Going Global
1. Fragmented fiat regulation: Believing in arbitrage opportunities with stablecoins is a reversed-causality illusion.
Many people are optimistic about stablecoins, subconsciously assuming that simply moving assets on-chain as USDT or USDC will automatically eliminate all compliance, regulation, and friction from the traditional fiat world.
This is an illusion.
Stablecoins are never currencies that can operate independently of the real world; they are more like liquidity shadows of traditional fiat currencies extended into the digital realm.
Stablecoins can be arbitrageable, transferable, and generate efficiency gains only if the fiat on/off-ramps are compliant, smooth, and exhibit pricing disparities due to information asymmetry on both sides.
The reality is that over the past one to two years, regulation in the global fiat world has not converged, but has instead undergone a sharp and fragmented tightening.
- Brazil is becoming increasingly sensitive to large transactions, unusual activities, and cross-border fund flows under the PIX system;
- India is increasingly strict regarding non-resident fund flows, foreign exchange reporting, and local compliance requirements under the UPI framework;
- Although Russia is actively embracing crypto for cross-border transactions to counter sanctions, it is still reviewing the establishment of a strict digital currency circulation system;
- Payment policies in Latin America and CIS countries are frequently adjusted over the long term.
The fiat world has not been leveled; instead, it has become increasingly fragmented by regulation.
This gives rise to a critical pain point: if you don’t understand the “last mile” of fiat currencies in each country—who can receive, who can pay, who verifies fund sources, who handles local KYB/AML, who manages dispute resolutions and chargebacks, and who deals with banks and regulators—then your stablecoin will merely spin uselessly on-chain, unable to enable true large-scale cross-border hedging and settlement in real commercial scenarios.
If you don't understand fiat currencies, it's hard to achieve large-scale arbitrage with stablecoins.
Theoretically, as infrastructure evolves, the rigid arbitrage opportunities brought by information symmetry will only diminish. But the world will not become entirely transparent simply because of technological progress. The regulatory and banking systems in many countries around the globe are far from as sophisticated or uniform as outsiders might assume. On the surface, everyone uses similar compliant language; beneath the surface, execution varies widely due to local politics, banks’ risk appetites, foreign exchange pressures, industry interests, and macroeconomic cycles.
This means the boundaries of policy and compliance are always subject to tidal shifts. Opportunities will always exist—but what’s truly difficult is recognizing these long-term information asymmetries and transforming them into your own cognitive moats, compliance interpretation capabilities, and local resource advantages.
By 2026, Wooshpay secured investment from Yunfeng Capital, Payoneer was acquired by Nuvei, and Primer raised a new round of $100 million in funding. The underlying logic is that some investors have finally grasped the core truth: the key to competition in the stablecoin era still lies firmly in traditional fiat currency local infrastructure—there remains significant potential in the fiat world. The first principle of cross-border payments has never been cross-border—it’s local.
2. Break free from path dependency: The vast majority of domestic PSPs have not truly penetrated overseas local mainstream markets.
When it comes to internationalization, we must honestly admit one thing: over the past many years, the so-called "successful overseas expansion" of the vast majority of Chinese PSPs has essentially been tied to Chinese merchants, Chinese supply chains, and Chinese cross-border e-commerce.
This is certainly a form of success, but it does not equate to true localization success.
In the past, the Chinese-speaking community had a natural path dependency: starting from China, they looked at where they could open accounts, where they could obtain MSOs, and where they could apply for EMIs. Either everyone rushed to pursue the lowest-barrier Hong Kong MSO, competing fiercely in ultra-low fee environments, or they aggressively pursued the most expensive and saturated traditional paths like Singapore’s MPI, the UK’s EMI, or Hong Kong’s SVF.
This is more of an extension of “offshore entity + Chinese client + Chinese methodology.”
Many businesses have gone global alongside Chinese manufacturing and Chinese cross-border e-commerce sellers. We have benefited from the红利 of China’s cross-border e-commerce era, but have not yet established sufficiently deep local financial penetration overseas.
In other words, many Chinese PSPs going global address the issue of "how Chinese merchants can receive payments, settle funds, and spend money overseas"; but they have not yet truly solved the larger challenges of "why overseas local merchants should choose you, why overseas local banks should deeply support you, and why the overseas local ecosystem cannot do without you."
Many overseas local mainstream merchant ecosystems cannot be penetrated simply through English emails and online business development. The European and American markets have mature industry circles and trust networks, while Latin American markets rely even more on Spanish, local relationships, and long-term in-person engagement. Local societies place great importance on personal networks and trust built through prolonged contact. Sitting in Shanghai or Hong Kong and sending English emails may not even get a glance. Without Spanish, you won’t even be able to approach local banks to negotiate safeguarding accounts, speak with local payment companies about integrations, or understand the real pain points of local merchants.
This is also why Chinese PSPs have historically had limited exposure to overseas local merchants. Outside the ecosystem of Chinese e-commerce and Chinese merchants, many are not as strong overseas as they might seem.
But does that mean Chinese PSPs have no opportunity?
On the contrary, Chinese payment products are highly competitive worldwide.
Look at today’s U.S. institutions—many are comparing themselves to Airwallex and even claiming they want to build the “U.S. version of Airwallex.” But from an Asia-Pacific perspective, many leading PSPs in China, both domestic and cross-border, have already achieved high maturity in product interface interactions, account system integration, payment flow design, reconciliation experience, and end-to-end ecosystem capabilities. For example, Photon Pay’s product architecture and user experience represent a dimensional advantage over many overseas markets.
The products and systems of Chinese PSPs are top-tier tanks; they just weren't deployed on the right battlefield before.
If we can move beyond the narrow perspective of “serving Chinese sellers” and instead view the market from the standpoint of another country, bringing product strength to broader middle ground areas to explore regulatory arbitrage opportunities and the art of infrastructure combinations, significant opportunities still remain.
There are several directions worth researching long-term.
First is leveraging underlying sponsors. For example, using U.S.-based banks as bin sponsors and local fintech infrastructure as foundational capabilities to penetrate Asian, Latin American, or other emerging markets. This approach is entirely different from the traditional path taken by Chinese PSPs in Asia, who directly negotiate with local banks. In the U.S., you can still issue cards without a license by relying on bank relationships.
Second is the closed loop of licenses and card networks. A payment license is not a collectible—it’s merely an entry ticket. The key is whether a closed loop of funds can be formed between the license, banks, card networks, clearing systems, and customer use cases. In certain countries, specific licenses may offer greater advantages in terms of VM integration, bank account opening, and expanding virtual asset services; in some smaller markets, the regulatory framework may actually enable you to build differentiated products.
Third is the regulatory framework and capability mix. Regulatory arbitrage is not simply about exploiting loopholes. Good regulatory arbitrage finds the optimal balance between cost, efficiency, customer needs, and compliance boundaries under different jurisdictions. Poor regulatory arbitrage simply runs to wherever regulations are lax, ultimately turning itself into a risk transit hub.
Payment is not a license to collect; the license is merely an entry ticket. What truly matters is turning the license into a product, the product into a network, and the network into capital efficiency. As long as you can truly empathize and start from the local perspective—integrating the product, license, banking, and use cases—Chinese PSPs have full potential to restart the game in many markets.
Section Two: Move Beyond Single-Channel Thinking and Build a Financial "Network" Based on Macroeconomic Factors
1. Single-channel business will inevitably lead to internal competition; only a capital network model can build long-term barriers.
If you only operate a single channel and a single market—such as focusing solely on e-commerce payments or virtual card issuance—your fate is nothing but price competition. Today you quote 30 bps; tomorrow, someone else slashes it to 10 bps using funded capital. Channel-based businesses have no customer loyalty unless they possess exclusive resources. Customers buy cost, success rate, stability, settlement cycle, and risk mitigation—not sentiment.
The long-term evolution of cross-border payments will inevitably involve upgrading from a single-channel service provider to a cross-border funds network operator.
The real network isn't just about saying I cover 100 countries, support 50 cryptocurrencies, and connect 200 banks. These are merely nodes, not a network.
A complete network enables heterogeneous cash flows from different countries, cryptocurrencies, and customers to achieve internal coordination and self-contained processing within your underlying system.
Channels earn the spread on fees, while networks earn structural efficiency.
If you have acquiring in Country A, disbursement in Country B, local settlement for merchants in Country C, and supplier payments in Country D, and your underlying clearing routing can internally match these cash flows, reuse positions, and net settle offsets, significantly reducing cross-border actual currency conversions and pre-funded capital requirements at the banking level, your cost structure will deliver a decisive competitive advantage over single-channel providers.
A single-channel company must find costs, positions, channels, and banks for every transaction. A networked company optimizes internal organization and efficiency across different cash flows.
The endgame of payment is not transaction fees, but capital efficiency.
(In mature markets in Europe and the U.S., the above network effects are already a “standard” for PSPs; this section aims to discuss the deep network effects of local regional market funds.)
2. Practitioners’ breakthrough strategy: Break through the cognitive barrier of “Latin America and Africa,” and build regional clearing hubs based on macro capital flows.
Since it’s difficult for many to truly penetrate the mature local merchant ecosystems in Europe and the U.S. in the short term, where should ordinary practitioners or growing institutions focus their breakthrough strategies?
First, let’s break a common mental habit. The world is vast—home to 8 billion people and a massive global GDP—but it’s also surprisingly small, as everyone in the industry now talks only about Africa and Latin America, as if no other new markets exist beyond these two regions.
Behind this herd mentality lies a cognitive laziness across the entire payments industry regarding global micro-geographic flows.
The true game-changer should shift focus away from these overhyped, increasingly saturated hotspots, and instead examine national-level macroeconomic trade and population movement data. Look for specific corridor regions characterized by extremely high flows but plagued by poor financial infrastructure due to geopolitical marginalization, or simply overlooked by mainstream giants.
It’s not just about the movement of goods, but also the movement of people. Goods flows include substantial real trade volumes—such as between China and Central Asia, Latin America and the U.S., South America and Southeast Asia, or specific CIS countries’ local currency pairs. People flows include labor migration, remittance services, student mobility, cross-border freelancer payouts, tourism, inbound spending, and international family remittances.
Global geopolitical conflicts continue to fuel the trend of deglobalization, but the rigid demand for funds generated by labor exports, cross-border consumption, and regional trade has never been interrupted.
In standard markets like Europe, the U.S., Hong Kong, and Singapore, everyone can access Stripe, Adyen, Airwallex, and WorldFirst; capabilities are becoming increasingly transparent, and prices are converging, leaving little scarcity.
But in those complex, restricted, and even universally considered “unsexy” long-tail markets, if you can leverage your local resources and system capabilities to create a closed-loop infrastructure for payment, settlement, foreign exchange, and disbursement for specific high-frequency trade corridors, you can become the indispensable clearing hub for that corridor. The more difficult and less talked-about the country is in PowerPoint presentations, the stronger the network node barriers become. The real solution is to combine your resource advantages and local capabilities to build closed-loop systems for these tightly coupled national trade corridors.
Chapter Three: The Truth About Web3 Payments, and the Deep Integration with Local Fiat
1. Don’t just shout slogans on X: Respect and embrace the "old heads"
Friends who know me are aware that I’ve been long on stablecoins and have long believed in the transformative potential of Web3, DeFi, and RWA on financial infrastructure. But I don’t believe Web3 will quickly displace traditional fiat payment systems.
Many Web3 professionals hold a misconception: they believe traditional finance is inefficient, costly, and slow, so simply moving funds on-chain and rebuilding everything with stablecoins and smart contracts will naturally replace banks, card networks, clearing systems, and PSPs.
This assessment is too optimistic. The fiat world is certainly inefficient, but it doesn’t exist in a vacuum. It is underpinned by banking account systems, regulatory trust, clearing networks, reserve assets, legal liabilities, dispute resolution mechanisms, anti-money laundering rules, sanctions screening protocols, and decades of real-world credit built on tangible value.
These may seem bulky, but they address the most fundamental real-world problems: Who is responsible when something goes wrong with money? Where are the assets? How do users redeem them? Who do regulators turn to? Will banks even accept them? Will merchants dare to accept them? Will large institutions dare to buy them?
So, stablecoins and on-chain payments can improve efficiency, but they cannot bypass these issues.
A more realistic path is not Web3 veterans overthrowing traditional finance, but rather the established players in traditional finance—banks, card networks, licensed payment institutions, asset management firms, and clearinghouses—gradually embracing and integrating Web3, turning it into a new clearing tool, asset vehicle, and funds network within their own systems.
What regulators and governments truly favor is never pure decentralization, but rather "controllable innovation."
Stablecoins can improve the efficiency of cross-border clearing and settlement, but regulators will certainly ask: Who is the issuer? Where are the reserve assets held? How are the reserves audited? Is the redemption mechanism stable? How is KYC/KYT performed on-chain? How are sanctioned addresses screened? How are suspicious transactions reported? Who stands behind the stablecoin in case of a run? Who provides the bank accounts? Who bears the custody responsibility?
Without clearly addressing these issues, stablecoins will struggle to truly enter large-scale B2B payments, corporate settlements, merchant acquiring, institutional fund management, and mainstream asset allocation.
This is why traditional giants like Stripe, BlackRock, Visa, Mastercard, and PayPal are all investing in stablecoins, RWA, and on-chain payment infrastructure. They are not suddenly converted to decentralized ideals—they recognize how on-chain technology optimizes clearing and settlement costs, capital efficiency, and asset liquidity.
But more importantly, they know how to fit these new technologies into compliance frameworks, making banks willing to participate, regulators able to understand, institutional funds able to enter, and ordinary users able to use them. This is how Web3 truly enters the mainstream world.
The same applies to DeFi and RWA. There are certainly long-term opportunities, but simply tokenizing an asset, writing a few attractive APYs, and publishing several X posts doesn’t mean you’re transforming finance.
The real value of RWA lies not in the act of “tokenizing” itself, but in whether it can reduce the costs of asset issuance, registration, trading, clearing and settlement, custody, and disclosure. If an asset’s tokenization does not improve liquidity, increase risk transparency, clarify legal relationships, or streamline exit mechanisms, it is merely a change in packaging—not an upgrade to financial infrastructure.
To attract traditional capital, DeFi must also learn to explain risks in language that traditional finance can understand.
The first question traditional capital always asks is not “How high is the return?”, but “How is the principal protected?” What are the underlying assets? Who is managing them? Who is auditing? Who is custodizing? How are defaults handled? How are smart contract risks controlled? How are oracle risks controlled? What happens in case of a hack? Can redemptions still be processed during extreme market conditions?
Especially after the AI boom, on-chain attacks, automated phishing, address pollution, fake identities, and AML countermeasures will only become more scaled and more隐蔽. Without a truly strong risk control and compliance foundation, DeFi will struggle to accommodate large-scale traditional capital.
Of course, this doesn't mean Web3 payments lack opportunities.
On the contrary, U cards, fiat on-ramps/off-ramps, on-chain payroll, Web3 merchant acquiring, cross-border freelancer payroll, and stablecoin B2B payments—as part of the payments ecosystem—still have significant room for growth in transaction volume.
But for these scenarios to achieve real adoption, it’s not enough to rely solely on a decentralization mantra or force them through with brute force. It must understand the Web2 world and its rules: how banks think, how regulators ask questions, how merchants process payments, how users interact, how risks are mitigated, and how funds return to local accounts.
So I’ve always believed that the biggest opportunity for Web3 payments isn’t to break away from traditional finance, but to combine the lightness, speed, and low cost of stablecoins with the solidity, stability, and regulatory compliance of traditional finance.
Those who can respect the older generation, understand them, and ultimately convince them to willingly adopt new tools are more likely to reap the broad benefits of Web3 payments.
2. The Ultimate Solution: A Hybrid Settlement Foundation of Local Fiat and Stablecoin
Returning to the original question: Where is the future in such a crowded space? I believe the answer is clear: the deep integration of Local Fiat + Stablecoin.
The prototype of the next-generation cross-border payment company will be a comprehensive operator capable of mastering both of these giants in both directions and layering networked capabilities in between.
On one end is strong local fiat capability: local accounts, local payment processing, local payments, local wallets, local clearing, local banks, local foreign exchange, and local compliance.
On the other end are ultra-light native stablecoin capabilities: stablecoin payments and receipts, issuance or distribution, on-chain clearing and settlement, wallet systems, address risk control, on-chain KYC/KYT, reserve and redemption, institutional-grade custody, and cross-chain and multi-chain liquidity. In the middle are core network hedging and netting capabilities: fund reuse, position management, internal matching, net settlement, risk identification, and pricing across multiple countries, currencies, scenarios, and customers.
Understanding only fiat currency but not stablecoins will leave you lacking in new clearing and settlement efficiency. Understanding only stablecoins but not fiat currency will leave you stuck at the last mile of deposit and withdrawal and local use cases. Connecting both is a fundamental requirement to play the game in the future.
The critical bottleneck in breaking through: the ability to acquire local liquidity
The greatest challenge in implementing what appears to be a perfect system architecture is never the code, but rather how to establish relationships with local regulators, local banks, clearing networks, foreign exchange pathways, and real customers to access deeper liquidity in the corresponding corridor.
This liquidity cannot be obtained by simply clicking a button on an exchange or by connecting a few APIs—it critically depends on a combination of legitimate licensed acquisition, long-term local operations, genuine trade flow accumulation, and cross-border essential business hedging.
In many complex markets, business logic is never determined solely by technical APIs, but rather by local banks, regulatory frameworks, foreign exchange policies, industry resources, trade structures, and long-term trust.
Even if a Chinese team has excellent technology and a strong product, if they consistently view the local market from an external perspective—treating it merely as a market to be connected—they will struggle to truly capture deep liquidity.
Local partners care less about the financial innovations in your PowerPoint and more about whether you’re willing to commit long-term, whether you understand local regulations, whether you can take on compliance responsibilities, and whether you can deliver real value to the local ecosystem.
So, the core of the deep water isn't simply "finding channels," but embedding yourself into the local利益 structure and business network.
This means the team cannot merely operate remotely from Singapore, Hong Kong, or Shanghai—they must truly go local, building bank relationships, regulatory communication mechanisms, merchant service capabilities, and tax and legal interpretation expertise, while establishing long-term partnerships centered around real trade and real customers. Only when you transition from an external channel provider to a trusted node within the local financial network will deep liquidity flow in steadily.
The final profit zone: Become the “liquidation shovel” for the Corridor area.
Because the financial infrastructure in these Corridor regions is underdeveloped—with insufficient bank coverage, inefficient foreign exchange pathways, fragmented local clearing, and clear disconnects between on-chain and off-chain systems—the arbitrage friction and efficiency premiums remain high.
The next big opportunity isn’t about creating another flashy checkout button for standard merchants in Europe or the U.S.; it’s about someone willing to patiently dismantle the complex fiat barriers and on-chain gaps in these difficult corridors, one step at a time.
You don’t necessarily have to step onto the stage to compete globally with international giants, nor do you need to become the largest merchant brand. Often, a better position is to operate from the bottom layer, building clearing infrastructure for specific regions, specific cryptocurrencies, and specific fund flows.
If you can build a solid local fiat + stablecoin dual-clearing foundation in complex, high-barrier regions such as the Middle East and Southeast Asia, China-Russia, Latin America, CIS, or Central Asia—or for specific local currency pairs in Southeast Asia—and provide underlying clearing APIs to other PSPs and licensed Web3 institutions, establishing yourself as the essential “clearing shovel” and foundational infrastructure for that region, this remains a highly profitable market with strong barriers. Because what you’re selling isn’t just a single payment channel, but local liquidity, regulatory expertise, fund routing efficiency, and intrinsic network hedging capabilities.
Future competition will no longer be about how many standardized channels you have in shallow waters, but about a few core challenges in the deep waters:
- Can you help merchants in complex or restricted countries receive funds locally?
- Can you send money securely, compliantly, and at a low cost?
- Can you leverage native network liquidity to help clients reduce currency exchanges, pre-deposits, and tied-up capital?
- Can you make stablecoins move from theory to practice, truly integrating into local consumption, merchant supply chains, B2B trade payments, and business operations?
These issues are the true watershed for the next stage of cross-border payments.
Conclusion: Step down, go find the gold in the deep waters.
The most crowded shallow waters in cross-border payments are destined to see profits eroded by capital subsidies to near zero.
In shallow waters, competition revolves around sales, fees, fundraising, and PPT stories. In deep waters, it’s about expertise, resources, compliance, capital efficiency, and long-term patience.
The keywords for the next-generation cross-border payment company will not be "cheaper," but rather "more local, more networked, more stablecoin-native."
Whoever truly understands the weight and complexity of local fiat currencies, while mastering the lightness and speed of stablecoins, and fuses them into the intricate local business networks, will have the opportunity to anchor the golden future of the next decade in this crowded赛道.
Ultimately, the PSPs that truly make money in this industry often work quietly, while the unprofitable institutions still fiercely compete in seemingly mainstream, glamorous, suit-and-tie sectors.
Information asymmetry in this world always exists. The most profitable opportunities often come from deep-water capabilities that are highly non-standard, difficult to replicate, and hard to clearly articulate in research reports. Many truly profitable institutions are not loud—they may resemble ordinary traders, distributors, or local service providers rather than star companies constantly on stage telling stories about global financial infrastructure.
You will never see the full business opportunity on WeChat official accounts, and brokerage research reports rarely reveal the underlying profit structure.
There are no shortcuts in cross-border payments; the only solution is to get involved, get involved, and truly get involved.
You can only find gold by stepping into the mud.